South Korea’s Financial Services Commission has delayed its annual household debt management plan by more than a month, leaving banks unable to lock in yearly caps for household lending and finalize business strategies. With talk that regulators could tighten overall lending limits, some lenders are weighing broader changes to their loan portfolios.
Financial authorities are now expected to push the plan — originally slated for late February — to after the end of this month, the financial industry said Tuesday. The delay is widely attributed to last-minute adjustments tied to tougher rules for loans to multi-home owners and rental business operators, which require further revisions to the target growth rate for total household lending.
All banks face uncertainty without a confirmed annual target, but the burden is heavier for lenders that exceeded last year’s goals. Regulators plan to impose a penalty by deducting the overage from this year’s limit, though they have not disclosed the deduction rate or calculation method.
Among the five major banks, KB Kookmin Bank was the only one to exceed its target. Its household loan growth last year totaled 2.127 trillion won, surpassing its 2.0061 trillion won target by 120.9 billion won. Some internet-only banks and regional lenders are also believed to have exceeded their targets, raising the prospect of tighter constraints on lending this year.
Regulators are expected to keep the principle of deducting excess growth, but may consider that annual growth targets were cut to about half during last year’s June 27 real estate measures. That has fueled expectations that authorities could add safeguards rather than apply a uniform penalty, given the policy-driven adjustment.
Tension is higher among mutual finance institutions. Saemaul Geumgo’s household loan growth last year exceeded its target by 5.31 trillion won — about four times the originally set growth-rate goal. Authorities are reviewing an option to set this year’s household loan growth target near 0%. If adopted, new lending would be effectively constrained, forcing a broad overhaul of business plans. Regulators also see a need to strengthen Saemaul Geumgo’s household debt management system, raising the possibility of additional measures.
Analysts say tougher household debt controls could reshape banks’ growth strategies and earnings. Stronger caps would limit loan expansion and directly pressure interest income, a key revenue source.
Internet-only lender Toss Bank is also watching closely. It plans to launch a mortgage product this year, but would need approval of terms and an allocation of lending capacity under a tighter cap regime. For now, it is focusing less on target calculations and more on building systems and reviewing risk management.
“Stronger total-volume controls are an unavoidable trend, but the delay in detailed standards makes it hard to set strategy,” a banking industry official said. “If the regulatory intensity is higher than expected, it could affect loan growth plans and the profit structure as well.”
* This article has been translated by AI.
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